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International capital flows, external debt, and New Zealand financial stability

Author

Listed:
  • Michael Reddell
  • Ian Woolford
  • Sean Comber

    (Reserve Bank of New Zealand)

Abstract

New Zealand is unusually dependent on foreign capital. Many of these substantial external liabilities are denominated in foreign currency, yet it is often correctly noted that we are not very exposed to the impact of changes in the exchange rate on the value of net external liabilities. This article goes beyond the aggregated data to further our understanding of the capital flows into and out of New Zealand, and to try to get a little closer to understanding who is taking the foreign exchange risks in these substantial cross-border flows. We then extend the analysis to examine potential points of vulnerability for the New Zealand financial system.

Suggested Citation

  • Michael Reddell & Ian Woolford & Sean Comber, 2001. "International capital flows, external debt, and New Zealand financial stability," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 64, December.
    • Handle: RePEc:nzb:nzbbul:december2001:1
    as

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    File URL: http://www.rbnz.govt.nz/-/media/ReserveBank/Files/Publications/Bulletins/2001/2001dec64-4WoolfordReddellComber.pdf
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    References listed on IDEAS

    as
    1. Ian Woolford, 2001. "Macro-financial stability and macroprudential analysis," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 64, September.
    2. Bruce White, 1998. "Monetary policy and the structure of the capital account: the New Zealand experience," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 61, December.
    3. Robert St Clair & Christine Tether & Bruce White, 1998. "The intermediation of international capital flows," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 61, June.
    4. Barry Eichengreen & Ricardo Hausmann, 1999. "Exchange rates and financial fragility," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 329-368.
    5. Kelly Eckhold, 1998. "Developments in the Eurokiwi bond market," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 61, June.
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    Cited by:

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    2. Paul Bedford, 2008. "The global financial crisis and its transmission to New Zealand – an external balance sheet analysis," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 71, December.
    3. Leslie Hull, 2003. "Financial deregulation and household indebtedness," Reserve Bank of New Zealand Discussion Paper Series DP2003/01, Reserve Bank of New Zealand.
    4. Micahel Gordon & Leslie Hull & Clive Thorp, 2003. "Recent developments in New Zealand's financial stability," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 66, September.
    5. Chris Hunt, 2008. "Financial turmoil and global imbalances: the end of Bretton Woods II?," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 71, September.
    6. Nils Bjorksten & Anne-Marie Brook, 2002. "Exchange rate strategies for small open developed economies such as New Zealand," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 65, March.

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